Sutter Health deliberately destroyed 192 bins of paperwork that employers and labor unions had been in search of in a lawsuit that accuses the large Northern California well being system of abusing its market energy and charging inflated costs, in response to a state choose.
In a ruling this week, San Francisco County Superior Court Judge Curtis E.A. Karnow stated Sutter destroyed paperwork “knowing that the evidence was relevant to antitrust issues. … There is no good explanation for the specific and unusual destruction here.”
Karnow cited an inner electronic mail by a Sutter worker who stated she was “running and hiding” after ordering the information destroyed in 2015. “The most generous interpretation to Sutter is that it was grossly reckless,” the choose wrote in his 12-page ruling.
Sutter, which has 24 hospitals and almost $12 billion in annual income, stated the destruction was a regrettable mistake.
Employers and policymakers throughout the nation are carefully watching this authorized struggle amid rising concern concerning the monetary implications of business consolidation. Large well being methods are gaining market clout and the power to lift costs by buying extra hospitals, outpatient surgical procedure facilities and doctor workplaces.
“It’s stunning what Sutter did to cover up incriminating documents in this case,” stated Richard Grossman, the lead plaintiffs’ lawyer representing a category of greater than 1,500 employer-funded well being plans.
In April 2014, a grocery staff’ well being plan sued Sutter and alleged it was violating antitrust and unfair competitors legal guidelines. The plaintiffs started requesting paperwork associated to contracting practices, resembling “gag clauses” that stop sufferers from seeing negotiated charges and selecting a less expensive supplier and “all-or-nothing” phrases that require each facility in a well being system to be included in insurance coverage networks.
Sutter disputes the broader allegations within the lawsuit over its market conduct and stated its expenses are in keeping with its opponents’.
The choose stated that in 2015 Melissa Brendt, Sutter’s chief contracting officer within the managed-care division, and an assistant common counsel, Daniela Almeida, licensed Brendt’s govt assistant to destroy 10 years’ price of managed-care paperwork going again to 1995. The firm earlier had scheduled the paperwork to be destroyed in 2035 — 20 years later.
The govt assistant, Sina Santagata, testified in a deposition she wasn’t conscious of every other time in her 17 years at Sutter when the managed-care division destroyed information held in storage.
In his Nov. 13 ruling in opposition to Sutter, the choose singled out an electronic mail by Santagata as “particularly noteworthy.”
Email Sign-Up
Subscribe to KHN’s free Morning Briefing.
The govt assistant emailed Brendt, the chief contracting officer, on July 30, 2015, after sending the order to destroy the information. She wrote, “I’ve pushed the button … if someone is in need of a box between 3/15/95 & 11/23/05 … I’m running and hiding. … ‘Fingers crossed’ that I haven’t authorized something the FTC will hunt me down for.”
The Federal Trade Commission (FTC) enforces antitrust legal guidelines in well being care to stop hospitals, drugmakers and different business gamers from participating in anti-competitive habits that might hurt customers.
Santagata testified that she was being “sarcastic” in her electronic mail, and Sutter informed the choose that the FTC reference was only a “joke.”
Karnow noticed no humor in it. “There are infinite topics for jokes, and the choice of this one is strong evidence” within the plaintiffs’ favor, he wrote in his order Monday.
As a part of his sanctions in opposition to Sutter, the choose ordered the well being system to look at email backup tapes masking 2002 by way of 2005 to seek for paperwork on among the similar matters because the destroyed information. Also, Karnow stated he’ll take into account a plaintiffs’ movement for issuing jury directions which might be opposed to Sutter in mild of the doc destruction. The trial is scheduled for June 2019.
“The record shows that Sutter’s conduct was more than just an inadvertent error,” Karnow wrote.
Sutter spokeswoman Karen Garner stated the incident was a “mistake made as part of a routine destruction of old paper records” and the Sacramento-based well being system disclosed the error as quickly because it was found.
“We regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents,” Garner stated.
The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case in opposition to Sutter in 2014. The joint employer-union well being plan represents greater than 60,000 staff, dependents and retirees. The court docket licensed the case as a category motion in August, permitting a whole lot of different employers and self-funded well being plans to doubtlessly profit from the litigation.
In addition to its 24 hospitals, Sutter’s nonprofit well being system has 35 surgical procedure facilities and greater than 5,000 physicians in its community. It reported $11.9 billion in income final 12 months and earnings of $554 million.
Grossman, the plaintiffs’ counsel, stated he welcomed the choose’s ruling. But he stated a lot of the proof is irreplaceable, notably handwritten notes from negotiating periods and conferences involving key Sutter executives.
He stated these information coated a important interval within the early 2000s when there was a “sea change in Sutter’s contracting strategy” and it applied provisions that insulated the well being system from worth competitors.
“This was groundbreaking in the industry,” Grossman stated. “Until we address the anti-competitive behavior of entities like Sutter, we will not solve the problem of high costs in health care.”
The plaintiffs are in search of to get better a whole lot of hundreds of thousands of dollars from Sutter from what it claims are illegally inflated costs. The lawsuit alleges that an in a single day hospital keep at Sutter hospitals in San Francisco or Sacramento prices not less than 38 % greater than a comparable keep within the extra aggressive Los Angeles market.
A study published final 12 months discovered that hospital costs at Sutter and Dignity Health, the 2 largest hospital chains in California, had been 25 % greater than at different hospitals across the state. Researchers on the University of Southern California stated the large well being methods used their market energy to drive up costs — making the typical affected person admission at each chains almost $four,000 dearer.
“Sutter is a pretty extreme case of market power, but health care consolidation has become a really important issue across the country,” stated Kathy Hempstead, a well being care researcher on the Robert Wood Johnson Foundation. “It’s been on the back burner somewhat because of the debate over the Affordable Care Act, but there is bipartisan interest in tackling this.”
This story was produced by Kaiser Health News, which publishes California Healthline, a service of the California Health Care Foundation.
Chad Terhune: [email protected]”>[email protected], @chadterhune
Related Topics California Healthline Courts Health Industry src=”http://platform.twitter.com/widgets.js” charset=”utf-Eight”>
